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Wednesday, 15 August 1906

Senator P PEARCE (WESTERN AUSTRALIA) -- Outside any State capital, where the influence of each State would be equal so far as its deliberations were concerned. In view of the importance of the agitation, and the facts which have been brought forward to back it up, I do not think that any other State would have been so fortunate as to get a similar Bill put through the other House on such a slender foundation. I occupy a very peculiar position. I am not in the slightest degree, enthusiastic about the Bill. I look upon it as a mere trifling with a disease - which is certainly present and which will become accentuated as time goes on - and I feel sure that it will be ineffective. The criticism which has been directed against the Bill makes me think that possibly we are dealing with the subject in a way which may lead to some of the consequences which have been foreshadowed. It: does seem to me that it contains provisions which, so far from curing the evils at which they are aimed, will give rise to greater evils bv injuring legitimate trade within the Commonwealth. The first part of the measure is ostensibly aimed at monopolies both local and foreign, and the second part is aimed at dumping. Most of the criticism in connexion with monopolies has been grounded on a knowledge of similar legislation in the United States. There is one thing which we should always remember in dealing with a question in connexion with which an analogous condition of things is assumed to exist in the United States, and that is that in Australia we have the one great protecting power against monopolies, and it is the only effective power so far discovered, and that it is absent from the United States. In the United States there is a condition existing which vitally affects commerce and trade, and which does not exist in Australia. This difference of conditions is emphasized when we remember that almost all the cases which have been tried in the United States have hinged largely on a condition existing there which does not find a parallel in Australia. That is to say, that in the United States, the railways are privately owned, mrt. in many cases, by the trusts, whilst in Australia, they are owned bv the people, and trusts have no control ever them.

Senator Trenwith - That is an important factor, but it is not the only one.

Senator PEARCE - It is a very important factor. The laws of the United

States have been directed to a condition of affairs which has grown up primarily and largely owing to the fact that in that country the very highways of commerce are in the hands of private individuals, and are liable to trust management.

Senator Mulcahy - The arteries of commerce.

Senator PEARCE - Yes; the arteries of commerce.

Senator Dobson - A number of the trade and commerce cases hinge upon that.

Senator PEARCE - I may say that 75 per cent, of the cases that have come before the United States Courts have been cases in which combines have exercised their powers through the control of the railways, and generally of the means of transportation.

Senator Fraser - That could not affect the seaports.

Senator PEARCE - So far as our seaborne trade is concerned, we are in exactly the same position as the United States.

Senator Dobson - I doubt whether anything like 75 per cent, of the American cases hinged upon the control of the railways.'

Senator PEARCE - I have read many of the cases, and it seems to me that quite 75 per cent, of them have been case's in which the trusts have exercised their power by the control of the means of transportation.

Senator Trenwith - Where that has been a factor; but there have been other factors.

Senator PEARCE - It has been the main factor contributing to the evils which have been brought before the notice of the courts. That in itself would suggest that if in the United States, _ where they have passed some sixteen anti -trust laws-

Senator Playford - They have passed hundreds of such laws in the States.

Senator PEARCE - I am speaking of laws passed by Congress.

Senator Playford - I do not think that more than five or six of such laws have been passed bv Congress.

Senator PEARCE - The honorable senator is wrong. If he will refer to Snyder'sAnnotatedTrust Laws of the United States, which can be obtained from the Library, he will find that there have been fourteen or sixteen trust laws passed bv Congress. For many years Congress passed them at the rate of one each year, so rapidly did thev discover loop-holes in previous legislation. They passed an antitrust law in one year, and in the following, year had to pass another to remedy some defect discovered in it.

Senator Playford - The first was passed in 1887, the second in 1890, the next in 1894, and there were three passed in 1903.

Senator Dobson - Those must be only the more important laws.

Senator Playford - The others must be very small.

Senator PEARCE - My authority is the work to which I have referred the honorable senator, and he will find that my statement is borne out. The great trusts in manufacture and production in the United States have been enabled to successfully exercise their powers very largely, because of the fact that they have been in a position to secure a controlling influence in the management of the railways leading to the places at which their manufacture or production is carried on.

Senator Playford - There is no doubt about that.

Senator PEARCE - If we take the instance of the Coal Trust we shall find that to-day that trust practically dominates the railways in the Pennsylvania district. Having a dominating influence in the management of those railways, and the area of coal production in their hands, thev are able to command the whole of the coal trade of the United States. Such a condition of affairs could never arise in Australia. It is impossible to imagine a coal trust in Australia owning the coal area, and also 'the lines of communication leading to it. We are, therefore, in Australia in a far more favorable position, in which to cope with trusts, than are the people of America, because we hold the principal means of transportation. In the United States, notwithstanding all their activity in passing this legislation, and the tremendous public opinion behind the Legislature and the Judicature - because these trusts have public opinion in the United States very strongly against them - the trusts continue to exist to-day as strong as ever they were, and I shall prove before I sit down that in the very case quoted bv the Minister in introducing the Bill the trust referred to continues to flourish, notwithstanding the injunctions of .the Court. In this connexion the thought has occurred to me that whilst the United States have tried to gi apple with trusts bv the methods proposed in this Bill, in Australia we have been able to deprive them of one of their greatest power by the adoption of a certain method which would appear to be the only method yet discovered to cope with them, and that is the ownership of the industries themselves. That is proved conclusively with respect to railways. In Australia, bv the State ownership of the railways, we have not only done nothing to injure the people, but have aided beneficently every industry in the country, and have stimulated the production of wealth.

Senator Mulcahy - An absolutely justifiable piece of State Socialism.

Senator Findley - All State Socialism is justifiable.

Senator PEARCE - At any rate a prima facie case is made out for considering whether the same means should not be adopted to cope with trusts when they have reached the stage they have reached in America in many instances, and are rapidly reaching in Australia. I shall return again to the question of monopolies later cm; but I should like to say now with regard to the dumping provisions of the Bill that they appeal to me more strongly than does the first portion of the measure. That may seem somewhat singular to those who know that on questions of fiscalism mv views are in the direction of free-trade. I think it as well to be frank in these matters, and I wish to say that when I consider the question of dumping, I have to admit that there is no weapon in the free-trade arsenal that can effectually deal with that condition of things. Where it is a question of the production of wealth, I believe it is possible to prove that you can have just as great a production of wealth under free-trade as under protection. Otherwise, I should not have been a free-trader. But when we are dealing with dumping we are dealing not with a normal condition of affairs, and real !v not with trade at all. So far from being trade it is Letter designated as war or murder. Therefore, while one set of conditions might be applied to trade carried on under normal and fair conditions, it would be unwise to apply the same conditions to trade which is not normal, and which is unfair. I recognise that freetrade, when faced with this question of dumping, provided that it is proved to exist or is possible, leaves a country defenceless. It is on that account that 1 am inclined to view the second part of this Bill with more favour than the first part.

Senator Mulcahy - Would the honorable senator define what he means by " dumping " ?

Senator PEARCE - I shall come to that later. The second part of this Bill contains provisions which do not, in my opinion, interfere with trade, so long as it is fair, and is conducted on normal lines. They will be put into operation only when fair and normal lines are departed from. It is difficult to define " dumping," because there is some legitimate trade which in its effect is the same as dumping, but which is not the same in intention. Dump- : ing I take to be the action of a foreign firm in sending into this country manufactures or productions, and selling them in our market at below cost price for the purpose of destroying a local industry.

Senator Drake - Could not that be dealt with by a special Bill ?

Senator Playford - This is a special Bill.

Senator PEARCE - I point out that a special Bill would be altogether too cumbrous a weapon for the purpose. We must have some weapon ready loaded, to be discharged at the proper moment. To be effective it must be discharged before the local industry is destroyed. If we had to depend on the passing of a special measure to deal with dumping, the local market might be captured, and the injury done before the legislation necessary to prevent it had been passed. Whilst giving mv interpretation of dumping, I admit that there are many difficulties in the way as to when and where it should be applied. For instance, an Australian merchant goes into a foreign market, and, by the possession of keen business ability, is able to buv goods at great advantage, and to sell them in our market at below the cost price of those goods manufactured in Australia.

Senator Mulcahy - He might be able to do so, because of the circumstances ruling in the foreign market.

Senator PEARCE - That is so. I have some consolation in this matter from the fact that under this Bill when a charge of dumping is made, it must be proved to the satisfaction of an impartial court. A court that is not interested in trade, and of which the interested parties are not members, will determine the question whether what is complained of is legitimate trade or dumping. I think that we can certainly trust such a court to deal with the matter. I do not believe that the Minister of Defence quite grasped the meaning of the Bill when he said that it would not apply, except where a manufacturer was in a position to supply the whole of the Commonwealth.

Senator Playford - I did not say that. I was at the time referring to ari industry such as the cultivation of coffee. It would be absurd to apply it in a case like that.

Senator Drake - It would apply to manufactures, and riot to produce.

Senator PEARCE - We might have manufacturers carrying on an industry in the Commonwealth on which other industries were vitally dependent. One of those manufacturers might take action, and if the Attorney-General took up his case, and instituted a prosecution, the importation of those manufactures would be immediately prohibited. The local manufacturers would be unable to supply the demand, and the dependent industries would suffer. In such a case the consequence would be that an infinitely larger number of people would be injured by the action taken under the Bill than would be benefited bv the prohibition of the importation of the goods.

Senator Trenwith - They get prohibition because they cannot get protection.

Senator Playford - That is all guarded against.

Senator McGregor - Yes, by the Court.

Senator PEARCE - No. As I read the Bill, when the Attorney-General has been approached, and a prosecution instituted

Senator Trenwith - But before that the Comptroller-General has to make inquiries.

Senator PEARCE - As I read the Bill, when a prosecution is commenced, the importation must stop, or, if it continues, it must be under a bond. While a case is being heard the particular trade is at a stand-still; and when we remember the ramifications of commercial life, and how industries inter-depend, we may easily conceive of numbers of cases in which infinite harm might be caused. And who has the key to the problem? The importer of the particular goods; and unless he takes the personal risk of giving a bond, importation must cease.

Senator Trenwith - But importation ceases only so far as the baneful importer is concerned. There may be one hundred other importers against whom there is no complaint.

Senator Drake - Surely the stoppage of importation operates all over Australia?

Senator PEARCE - The case cannot be as stated by Senator Trenwith, because otherwise the Bill would be ineffective.

Senator Playford - Other importers might not be selling at ridiculously low prices.

Senator PEARCE - But if the importers were selling at low prices, would they all be cited as parties to the case? If so, then trade would be stopped just as effectively.

Senator Playford - That is not likely to occur.

Senator PEARCE - We ought to approach this matter cautiously, in order to see if there is not some possible way out of the difficulty.

Senator McGregor - I have heard of such a thing as a test case.

Senator PEARCE - Whether there be a test case or not, it would be serious for trade if the importation of a particular article had to be absolutely prohibited pending the decision of the Court. The Government ought to seriously consider whether some method cannot be devised to allow a trade, under the circumstances, to continue, subject, it might be, to certain restrictions. Senator Drake, I think, put his finger on a weak spot when he said that we have a limited power, in that we can deal only with trade between States and oversea trade. Senator Best's argument that we have power to apply the Bill to foreign trading corporations formed within the Commonwealth seems to me somewhat weak. If we have power so to apply this Bill, which deals with methods of sale, and incidentally regulates those methods according to the' industrial conditions under which industries are carried on, I am satisfied that we have full and ample power to deal with the industrial laws of the Commonwealth. In my opinion, it would be desirable to have that power, and I only hope that Senator Best is right ; but I am somewhat afraid that the honorable and learned senator would not himself be prepared to go so far. To me, ag a layman, however, that seems to be the logical outcome of the honorable senator's arguments. If we have power to say to a trader in a State that he shall not sell goods in that State at certain prices, because thereby he is monopolizing trade - that such a trader shall not carry on a system of rebates - then we have also power to say to him that he shall not employ his men during certain hours and at certain wages because in another State other employers are paying higher wages and affording more favorable conditions.

Senator Trenwith - So we could if we were not specifically prohibited.

Senator PEARCE - Senator Trenwithmust remember that the power we have relating to arbitration is a special power as to trade disputes. The Bill does not deal with trade disputes between one employer and another as to the conditions of trade, but it may deal with a case in which all the employers except one are satisfied with the conditions. Let me cite a case in point. I was asked to submit an amendment to the Bill, but I declined, on the ground that we have not the power to make such a provision as was desired. In Victoria a certain manufacturer of self-raising flour issues a coupon with each packet, and ' I was asked to submit an amendment by another employer, who stated that he could just make a fair profit by selling at the same price as his rival, and without issuing any coupons. I may explain that purchasers who collect the coupons are allowed a rebate of so much on returning them to the manufacturer. The amendment I was asked to submit would, if carried, have had the effect of making this coupon system illegal ; and undoubtedly \t is a system of rebate.

Senator Playford - In South Australia we have done away with coupons.

Senator PEARCE - That was done by State law, and I am now talking of Federal law. I believe that under this Bill we could prevent such' a system in Inter-State trade; but will any honorable senator, layman or lawyer, tell me that we have power to carry into effect such an amendment as that I was asked to submit?

Senator Millen - According to the advocates of this Bill, it would have to be proved that the issue of the coupons was injurious to the public.

Senator PEARCE - According to Senators Best and Trenwith, it would have to be proved that in the issue of the coupons there was intent to injure the public.

Senator Trenwith - We could not prevent the issue of these particular coupons by means of this1 Bill.

Senator PEARCE - The gentleman who asked me to submit the amendment is a con- stituent of Senator Best and Senator Trenwith, and I refer him to them.

Senator Trenwith - I have heard all about the case.

Senator PEARCE - I told the manufacturer that, according to my limited legal knowledge, it would be impossible for the Federal Parliament to deal with such a case. To return to the main question, my opinion is that trusts, combines, and monopolies are not the creation of political conditions such as those brought about by freetrade or protection. It is often said that trusts are the result of protective Tariffs. I believe that a protective country is more congenial soil for trusts ; but it is too sweeping an assertion to say that they are the result of protective Tariffs.' We find trusts in freetrade, as well as in protective, countries.

Senator Trenwith - We find that trusts originate in free-trade countries and spread to protective countries.

Senator PEARCE - I am not prepared to indorse that statement, though Senator Trenwith may be able to prove that the fact is as he states. In my opinion, trusts are the legitimate outcome of economic conditions.

Senator Henderson - As naturally as day is light.

Senator PEARCE - The day that science and machinery were applied to production trusts became inevitable. Trusts are merely the outcome of conditions which have prevailed and developed until we have our present-day system ; and the movement that they typify will not be checked, and cannot be altered by political action. Trusts are the outcome of economic conditions, and they can only be checked or altered by the alteration of the economic system.

Senator Fraser - The result of improper economic conditions.

Senator PEARCE - They are proper economic conditions arising from the system of capitalistic production. No other results could be expected.

Senator Drake - How can we alter economic conditions without political action ?

Senator PEARCE - In reply, I ask whether any political action for the last too years had anything to do with the introduction of machinery into production. Is it not a fact that the introduction of machinery has led to aggregation of capital ? Was it possible under the old hand-labour system to have a trust or combine ?

Senator Drake - I asked how we can alter economic conditions except through political action ?

Senator PEARCE - I say that other economic conditions are growing up - that the ' capitalistic system itself, apart and independent altogether of any political conditions, is bringing about a system of Socialism. It may be that political action will be needed to transfer the ownership of that system from the few to the many ; but political action never could create the system, and, therefore, cannot stop it. The only thing that political action can do is to decide the question whether we are to have capitalistic Socialism or collective or State Socialism. In view of the fact that I hold such views, honorable senators will not wonder when I say that I am altogether sceptical - altogether an unbeliever - as to the first portion of the Bill. In my opinion, the conditions which this Bill proposes to regulate are altogether beyond the power of this or any other Parliament, and that any action on our part in that direction would be futile. Even the trusts themselves are helpless in the grip of circumstances. The owners of the industries involved in the trusts have been forced into their present position, in many cases against their own free will, by the economic conditions. It was either trusts or extinction.

Senator Playford - Is it impossible to carry on the production of oil without a big trust ?

Senator PEARCE - I have here WiZshire's Magazine, published in New York in July, 1906. in which appears an article headed " The ' System ' and Competition." as follows : -

We have often tried to show by theory and fact how competition of the small dealer with the trust has become practically impossible.

Here are some facts developed last month that may interest our readers : -

How the Pennsylvania does it. (New York American.) ,

The " Pennsylvania" is the trust which Senator Playford said had been wiped out.

Senator Playford - I said nothing about that trust.

Senator PEARCE - The quotation continues -

Philadelphia, 25th May. - Alexander J. Cassatt was boldly charged by a once wealthy coal producer, testifying at the Inter-State Commerce Investigation of Pennsylvania Railroad Graft, and alleged blackmailing methods to-day, with being, not only the author of his woes, but as having issued orders to grafting subordinates which have driven scores of independent operators to the verge of ruin.

Another sensational feature of the probing today was sworn testimony by Chief Engineer Joseph \V. Crawford, of the Pennsylvania Railroad, that his partners in the ownership of a 60,000 acre tract of coal and lumber land in West Virginia were Vice-President Rea, of the Pennsylvania, and Effingham B. Morris, a Pennsylvania director.

Amazing as it may appear, Effingham B. Morris was yesterday chosen one of a committee of five Pennsylvania directors to investigate the accused corporation.

Asked by the Commission why his business has slumped from an output of 125,000 tons in 1 goo to less than 17,000 tons last year, the witness exclaimed dramatically - " The Pennsylvania Railroad put me out of business. I was deliberately frozen out through orders. Somebody way up gave those orders, which were obeyed implicitly all down the line." " You believe, then, that high executives of the road gave these orders?" asked Government counsel. " High executioners, not merely executives," was the angry correction. " I believe Alexander J. Cassatt is the man responsible. I also believe he controls the Reading, the Baltimore and Ohio, the Chesapeake and Ohio, and the Norfolk and Western Railroads, through the community of interest plan. That pernicious combination is what has enabled a few favoured companies to prosper enormously, and crush out scores of independent operators."

Pent-up indignation, caused by years of oppression on the part of the vast Pennsylvania system, struggled for expression as the speaker went on to tell how his three collieries - the Lorraine, Reakirt, and Penn - had been running at a disheartening loss for thirty-six months.

Because of merciless discrimination shown by the Pennsylvania, one of the results was, he said, that large quantities of coal which he had contracted to sell at $1.12 and $1.15 cost him $1.48 a ton to deliver. He added, with a show of feeling, that he had remained in business, hoping against hope that some remedy would eventuate and save the wreck of his camp.

Here was a man who was forced to become a victim of the very system which he was partly condemning. Now I will come to the Standard Oil Company, which Senator Playford seemed to think was a beneficent trust. I have shown that when an organization of this kind secures a monopoly, or practically a monopoly, it is able to force even an unwilling person to become a member. The Standard Oil Company had a small beginning and we all know what it has become. The following extract is taken from the New York World, and is dated 25th May, of this year : -

The Standard Oil Company has its own telegraph system, leased or owned, extend ing to nearly every part of the country, was the one revelation out of the ordinary at to-day's session of the Inter-State Commerce Commission. The rest of the testimony had to do with the Oil Trust's characteristic tricks, such as giving oil away, compelling merchants to sell Standard products under threats of ruining their business, sending boys on bicycles to "spot" deliveries by the independents' waggons, underbilling of freight, and so on down the Standard's category of business morals.

George L. Lane, of Mansfield, O., who was employed by the Standard for fourteen months in 1901-2 for the purpose of driving independents out of business, was a most entertaining witness - excepting for the trust lawyers. He said he was employed by C. M. Lyons, of the Cleveland office of the Standard to go to certain designated places and use every means, fair or foul, to force the independents to quit.

Senator Millen - Before whom was this evidence given?

Senator PEARCE - There was an investigation ordered by the United States Government. "

Senator Millen - It was not before the law courts?

Senator PEARCE - No. The evidence was taken by a Commission presided over by Mr. Garfield, a son of President Garfield. The quotation continues - "My instructions," Lane said, "were to kill them, and 1 was told that if I could not do the job somebody else would be sent to take my place. In all of the towns, with the exception of Youngstown, the independent peddlers were forced to abandon their business. In Youngstown a man named William H. Vahey was encountered, and despite everything we could do, he held his trade. We gave oil away by the barrel and tank load, but it did no good. Vahey's customers threw it away. " Of course we could not give a preacher money, but we gave him oil. When we started to give oil away, we gave first one gallon, then two, if it was ' all right,' and increased it up to 100 gallons if necessary. We judged the ability of our 1 spotters ' by the number of gallons they gave away. At one time, taking al] expenses into account, it cost $6 a gallon to give the oil away. " Our rivals were followed during their distribution by boys on bicycles or men on foot. Spotters were also sent secretly from Cleveland, and if I did not find all the independent customers I got called down."

When he entered the independent field, Lane said, " Standard Oil men told him they would give away groceries if necessary to kill him off. He charged that a system of rebating to consumers was put into operation, and that the practice continues even now in certain parts of north-western Ohio. They told me they would not let me live," said Lane, " and they have been trying to starve me ever since, but I am still alive."

N.   M. Gibbs, a merchant of Kipton, O., said he was compelled to handle the Standard's oil because the Standard's agent threatened to start another store close by and sell every article he sold in competition.

This is the way in which the matter is summed by the newspaper from which I quote -

It does not seem to matter whether you are a rich owner of 60,000 of coal land or a poor owner of only an oil peddler s cart, you are -a marked man unless you wear the trust collar. The beauty of it all is that the monopolist is in the same boat as his victim, forced to do as he does, or be a victim himself. The clerk of the Standard Oil will be fined if he does not exterminate the peddler who peddles " independent " oil in his district. It's diamond cut diamond ; if he does not starve the peddler then the peddler starves him. Again, if the Standard Oil does not extermine its competitors when they are weak they may grow up to be strong and extermiruite it.

That is the problem we have set ourselves to deal with in this Bill. And how do we propose to deal with it? We propose to drive the trusts back again into the state of competition and the condition of affairs from which they originated. We have just as much chance of making the earth stand still as carrying out that idea. That is why I am sceptical as to the success of this Bill. I now come to Senator Playford's statement that the Sherman Act in America has "teen successful. He said that the authorities had been successful in getting an injunction under it. As a matter of fact, the trusts continue to laugh at the authorities in spite of a hundred injunctions. They defy the courts, they defy the United States Government, and they continue in spite of the Sherman Act. The Coal Trust and the Beef Trust, which the honorable senator quoted as victims of the anti-trust law of the United States, are flourishing to-day, and are as powerful as ever they were.

Senator Trenwith - The sausages of the Beef Trust have lost their character lately !

Senator PEARCE - I think that the revelations referred to have done more harm to that trust than all the United States legislation.

Senator Playford - They are continuing under a private arrangement amongst themselves that no one else knows anything about.

Senator PEARCE - That is what I am coming to. ' They continue without any parchment agreement, but they have what they call " a gentleman's agreement " amongst themselves. Here is a quotation from the Argus' American letter published on 1st May; I suppose it is genuine, and was not written in the office: -

PresidentRoosevelt and his Attorney-General have suffered a serious reverse in their campaign against the great combinations commonly called trusts, and it is due in part to the President's own extraordinary published argument of some months ago in defence of his friend Paul Morion, at the time when the latter withdrew from the Cabinet to become president (by the act of Thomas J. Ryan) of the Equitable Life Assur ance Society. Our great beef companies (the Armours, Swifts, Cudahys, Morrises, and one or two other concerns) have for a long time done business in accordance with a private combination agreement, thus maintaining what is practically a monopoly, and squeezing the public at both ends of the trade by keeping down the price of cattle and holding up the price of meat. Such combinations are forbidden by law unless they exist under a single corporate charter.

Three years ago the Government procured injunctions restraining the companies from acting in combination. This was a beginning. Two years ago, at the suggestion of Mr. Roosevelt, Congress created the Bureau of Corporations, headed by a commissioner empowered to obtain, for the President's use, information from the great corporations as to their affairs. Over this bureau the President placed a young lawyer, James R. Garfield, son of the President of the same name who was assassinated in 1881 by Guitean. Garfield and his agents began to collect information by personal application to the corporations. Under instructions from Congress they got a lot of it from the beef companies, with the understanding that a part of it should be held in confidence. They published a report which was quite favorable to the trust. But a part of their information was not printed.

The Government resorted to the Courts, and procured the indictment of the Armours, Swifts, Cudahys, and Morrises for violation of the antitrust law of 1890. There were sixteen of these accused men, representing the greatest incorporated beef and packing industries in the world, at Chicago, Omaha, Kansas City, and other places. At the outset they interposed the plea that under the constitution they were entitled to immunity, because they had been required by Garfield to give testimony against themselves. He had promised, as they proved, that their testimony should not be used against them, but it had been so used in procuring the indictments.

The letter goes on to say -

Great efforts were made by the Government to save itself from defeat at the hearing in Chicago on this plea for immunity. AttorneyGeneral Moody himself went to that city, and argued strenuously in Court for two days, say-' ing that if the accused men should escape trial it would be a calamity to the Government and the country. But all in vain. Three days ago Judge Humphrey, of the Federal Court, accepted the defendants' plea, gave them immunity, and discharged all of them.

That is the end ofthat case. The article goes on -

If now the corporations shall be found guilty, their punishment will be only a fine of a few thousand dollars.

Senator Playfordboasted that this Bill was almost a- copy of the Sherman Act -

Mr. Rooseveltought not tocomplain, for in preventing the prosecution of his friend Morton he (and Attorney-General Moody) argued that it was the corporations, rather than their responsible officers, that should be prosecuted and punished.

Is not that a " lame and impotent conclusion," that the great United States, after years of effort - because the case originated in 1903 - should find that the accused are all acquitted and allowed to- go free, and' that even the prosecution against them had to be based upon- their own admissions - that the men in the dock had to supply the evidence for their own prosecution?

Senator Playford - That was the reason for letting them off-

Senator PEARCE - That is the reason why they were let off, and if a Government like that of the United States is unable to get evidence except that which it obtained from the members of the trust, in strict confidence, does it not show how impossible it is to put such a law into effective operation?

Sitting suspended from 6.30 to 7.45 p.m.

Senator PEARCE - Before the adjournment for dinner I made a statement which the Minister for Defence did not seem prepared to accept as to the number of laws on this subject which have been passed by Congress. I have since been able to verify my statement, and I find that, so far from having over-estimated, I under-estimated the number. From Snyder's Annotated InterState Commerce Act and Federal AntiTrust Laws, I find that between 1887 and 1903 Congress passed twenty-one Acts, each dealing in some measure with the question.

Senator Playford - They must deal very slightly with the question, then.

Senator PEARCE - Some of the Acts deal very slightly with the question, but they are all in some measure amendments of the original Act. The honorable senator quoted a case in support of his contention that this kind of legislation has been effective in the United States. On page 161 1 of Hansard he is reported to have said -

In January, 1903, Mr. Gaines, a member of the Federal House of Representatives, for Tennessee, said - " This Coal Trust was destroyed. Yet the honest coal business survives, and is thriving in Kentucky and Tennessee, and coal is selling there to-day at S3. 50 to $3.75 - and why? The laws are enforced. Our Anti-Trust Statutes are enforced. The people are on top."

He inferred from the extract, and gave us to understand, that what is known as the Coal Trust of America has been broken up.v

Senator Playford - No; only so far as those two States were concerned.

Senator PEARCE - The case which the honorable senator cited applied to a small coal trust which had been formed in that State ; but the great coal-bearing, State of America is not Tennessee, but Pennsylvania. In 1890 the latter State produced over 90 per cent, of the total output of coal in the United States, and the Pennsylvania Trust has never been broken up. Presently I shall quote some facts from an American journal proving that it is not only in existence, but is pursuing its nefarious career as a vampire towards the other industries of the country. But, first of all, as the Minister quoted a number of cases which he seemed to think proved the efficacy of the law, I wish to show that the Sherman Act - the most stringent of all the American Acts - has on several occasions failed where, prosecutions have been instituted under its provisions. For instance, in 1894, an action was taken against the Sugar Trust, and although it was proved that it controlled 98 per cent, of the trade, the prosecution failed. The case is reported on page 253 of the Annotated Inter-State Commerce Act. Again, in October, 1898, the 'Beef Trust was charged' before the Circuit Court of the United States with being an illegal combination. The Circuit Court gave am injunction, but that was afterwards reversed by the Supreme Court. I have already dealt with the case which was instituted subsequently, and which the Minister traced up to a certain stage as having succeeded, but which actually failed on a very vital point. As regards the two cases which I have just quoted, their failure arose from this fact - that, while it was proved up to the hilt that there was a restraint of trade, it was a restraint of trade within a State. The prosecution was unable to prove restraint of trade between the States, and therefore a conviction could not be secured. As regards the Coal Trust of Pennsylvania, the American Review of Reviews for June, 1906, contains an article, from which I make this short extract -

Perhaps the most complete monopoly now existing in America is the Anthracite Coal Monopoly, and it will be next to impossible to break it up.

This trust is very interesting, because of the form in which it exists. In order to show the impossibility of this legislation to reach that kind of trust, I propose to quote from an article which is entitled " The Coal Trust, the Labour Trust, and the People who Pay," and which appeared in Everybody's Magazine for May last. It says -

The Coal Trust is the most effective "gentlemen's agreement " ever employed to evade the spirit of the law. No contract is needed to hold its members together. The power that combination gives them to make enormous profits by levying on the public an unjust tax of from fifty cents to one dollar a ton in the price of coal, is an adequately strong bond of union.

The article goes on to say -

In the enthusiasm born of good-fellowship and the pleasures of yachting, increased by the admirable food and the unlimited champagne, the gentlemen embraced one another, making proclamation that they were brothers at heart, and that the interest of each one of them was the cause for which they, united, would strive. Each one gave his " sacred word of honour as a gentleman," pledged in the sparkling yellow wine, that thereafter all warfare among them should cease. There were to be no" written contracts, no bonds. They were gentlemen. ".A gentleman's word is as good as his bond."

How would it be possible to prosecute a trust of that description ?

Senator Playford - How does the honorable senator know that that statement is accurate? Does it not sound like a statement in a novel ?

Senator PEARCE - The statement is proved to be accurate by the failure to get a conviction against the trust. That the trust is in existence is proved by the results that flow from its operations, by the dearth of competition between these gentlemen, by the complete co-operation amongst them in carrying on their business arrangements, and the absence of any known agreement or business contract between them. After dealing with the methods which the trust had adopted, the article goes on to say -

Thus the coal barons had yielded to the mightiest, and he had become king. He was in the saddle and ready to ride at the head of his forces in 1900. He brought about a general recognition of the Reading interests ; organized a' holding company, which owns the stock of the Philadelphia and Reading Railroad, the Central Railroad of New Jersey, the Philadelphia and Reading Iron and Coal Company, and. various other affiliated concerns: and made himself president, not only of the parent company, but of the stronger subsidiary ones. Remember that the' Reading Company owns sixty-three per cent, of all the unmined hard coal in the world, and that ever since Franklin B. Gowen unmercifully thrashed the Pennsylvania Railroad in a legal battle in r8/g, the latter has acted in concert with the Reading in all hard-coal matters.

Senator Drake - It is transportation.

Senator PEARCE - Yes; it is not only a coal trust, but a railroad trust.

Senator Best - Transportation is the secret of it.

Senator PEARCE - It is not altogether the secret of it, as I shall point out presently.

Senator Best - It is largely so.

Senator PEARCE - The fact that the trust controls railroads gives it an enormous power which no trust in Australia could secure. I propose to quote certain extracts, because I desire to show honorable senators that in Australia there is 'a trust which, so far as it is able, is acting on precisely similar lines. A man named Baer took a prominent part in the formation of the Beef Trust, and his part in the transaction is described in the following manner : - '

Directly the trust, now a tangible thing, was in working order, Baer set about securing control of the selling machinery, which was in the hands of powerful wholesalers, or sales agents. (Remember, in this connexion, that the strength of the Beef Trust and of Standard Oil rests almost wholly upon their control of the selling machinery.) The railroads organized sales departments of their own, or made contracts which placed the wholesalers under their direction; and the rule was established - and it is enforced relentlessly - of cutting off the supply of any dealer, wholesaler or retailer, who should depart from the schedule of prices fixed by the trust. So far as the railroads in the trust were concerned, the outward semblance of independent action was carefully maintained, as it is now. For instance, Presidence Baer, President Truesdale, President Thomas, and others would meet, quite by accident of course, in the Lawyers' Club, in New York, for luncheon. They talked about business - men of affairs always do that - and it was pure chance that the coal price-lists issued by each railroad after these luncheons were exactly the same. It was merely a general understanding. Here you have the " gentlemen's agreement " in its perfected, purified form.

There, again, we see the absolute impotence of this legislation to reach an agreement such as that. It would be necessary to put the men in the witness-box, and compel them to convict themselves before it would be possible to break up the trust, or prevent it from crushing out all its rivals in the country.

Senator Best - That is only an expression of opinion' by the honorable senator, and I do not agree with him.

Senator PEARCE - I should like the honorable senator, when he has an opportunity to speak in Committee, to say .how it would be possible to get at a " gentlemen's agreement."

Senator Best - On the circumstantial evidence a Justice of the High Court could find a fact.

Senator PEARCE - The Justices of the Supreme Court of the United States have failed to find a fact.

Senator Best - .That may be, "because in many cases there are obvious reasons which I need not state.

Senator PEARCE - I do not think that the honorable senator would charge the Supreme Court of the United States with corruption.

Senator Best - No.

Senator PEARCE - In order to show the money power of this trust, I quote the following passage from the same article : -

Is this advance which the trust has made warranted by conditions? Is the price we are paying now a fair price? Let us consider some figures. There has been an increase in the cost of mining, due to higher wages and physical difficulties in working lower levels. Evidence before the InterState Commerce Commission showed that the cost of taking the coal from the mine increased from $1.43 a ton in 1900 to $1.96 in 1903. In that time the price of coal increased a dollar a ton, nearly double the increase in cost.

The significant fact is that these trusts, by eliminating competition without increasing prices, are able to enormously increase their profits, and where they find it safe to do so, as in this case, they do not hesitate to increase their prices. I make that statement, .because it is claimed on behalf of one trust in Australia that, so far, it has not increased its prices. But the saving which has accrued to it as the result of the elimination of competition, the centralization of its factories and working staff, and the doing away with needless advertising and staffs of commercial travellers which were necessary while competition existed represents to them a profit which is greater than a substantial increase in the price of the article produced.

Senator Mulcahy - That might be considered fairly legitimate, I think.

Senator PEARCE - I shall deal with that phase of the question presently. In the last page of this article, I find the following : -

The Coal Trust is a typical instance of what we can see going on about us in every direction : the organization of the productive resources of the country^ and the centralization in a few hands of their direction and control. This trust is an especially interesting and a specially dangerous example, because of the perfection of its organization, and its success in taking advantage of the law.

Is there any justification for this centralization of vast power? Does the community in any way benefit from it? Undoubtedly in that it introduces order, economy, and system in place of confusion, waste, and individual caprice.

Is it dangerous? Yes, because it places a vast power in the hands of a few irresponsible individuals, giving them the privilege of impos ing on the public an enormous tax in the form of profits out of all ratio to the service they perform.

In that last sentence lies the answer* to the objection raised by Senator Mulcahy. It is shown that the profits they make by the saving due to cooperation are out of all ' proportion to the services they render to the community. The first part of the quotation I havemade constitutes the defence of the Government in introducing this Bill, but it lies with Ministers to do more than defend the introduction of "the measure. They must prove that it will do what it aims at. The question has been raised whether in Australia we require to deal with these trusts in the manner proposed by this Bill, or by nationalization^ because some doubt is expressed as to their existence. It has been my privilege to act as Chairman of" the Select Committee and Royal Commission recently engaged in inquiring into theexistence of one alleged trust in Australia. Reading these articles, and then lookingover the evidence given before that Commission, one cannot but be struck with the absolute similarity of the methods adopter! by the Tobacco Trust in Australia and the Coal Trust in America. There is, of* course, the difference which is dueto the fact that in Australia it has not been possible for the Tobacco Trust to secure control of any of the railways, whereas in America the Coal Trust has been able to secure such control. I direct the attention of honorable senators to the history of the formation of the Tobacco Trust ifrAustralia as given by Mr. Louis P. Jacobs,, one of the directors of the trust, in evidence taken by the Commission. At page 57 of the Minutes of Evidence, given before the Tobacco Commission, in answer to question 555, Mr. Jacobs traces the formation of the agreement, as he called it, between the various manufacturing firmsHe said : -

An arrangement has been concluded betweencertain firms in the tobacco trade, some of which are Australian and one English, a list of which is given herewith. Under this arrangement, each of the manufacturing companies holds aproprietary interest in every other such company. Every one of the companies concerned, however, carries on its business separately from the other. These manufacturing companies havepurchased an interest in the distributing house of Kronheimer Limited, and have appointed" this firm the ' sole distributing agent for their products to wholesale houses, for which service they receive a commission. Kronheimer Limited, however, also do a wholesale business themselves, i'.e., they supply retail tobacconists in competition with the other wholesale houses.

Honorable senators will remember that one of the essential points laid down by the man who organized the Coal Trust in America was that they should get control of the wholesale distribution of their goods. Here we have the Tobacco Trust in Australia doing precisely the same thing - forming a holding company in which each - of the manufacturing companies holds an equal interest, the holding company being responsible for the wholesale distribution of the goods of the manufacturers. Every pound of tobacco, every cigar, and every cigarette made in the factories represented in the Tobacco Trust must go through the holding firm of Kronheimer Limited. No man in Australia engaged in the wholesale or retail sale of tobacco, cigars, and cigarettes, can go to any of the factories represented in the trust, and purchase a pound of tobacco, a cigar, or cigarette there. Mr. Jacobs went on to say: -

It will thus be seen that while the British company obtains a share in the profits made from locally-produced tobacco, the Australian companies likewise obtain a share in the profit made from the sale in Australia of the tobacco of this same company.

He went on then to give the reasons which induced the manufacturers to form the trust, pointing out that prior to its formation there had been unrestricted competition, which had forced down profits and caused tremendous waste in production. He showed that, by coming together, they were able to avoid that waste and enhance their profits, andthat altogether the industry, as the result of the co-operation of the manufacturers, was in a far better position than it was formerly under unrestricted competition. The Bill is aimed against combinations of that kind. This combination is undoubtedly in restraint of trade, because it is practically impossible for any manufacturer in Australia to produce tobacco successfully in competition with the combine.

Senator Stewart - Has it injured the public ?

Senator PEARCE - No, I do not think it has. I am not arguing that it has injured the public, but that, so far as this particular trade is concerned, no rival manufacturer in the Commonwealth has a chance against the combine.

Senator McGregor - He must come in, or be snuffed out.

Senator PEARCE - He must. The point arises here that as, with the exception of a few lines, the trust has not raised the price of its productions to the public, it is claimed that it has not therefore injuriously affected the public. But are we to admit that the prices ruling for tobacco, cigars, and cigarettes prior to the formation of this combine must for all time endure; that, no matter what savings in production and distribution may be introduced, they must never be passed on to the consumer? The defence of those who say that this trust- does not injure the public is that the price of tobacco, cigars, and cigarettes has not been raised. I say that if there has been, by the use of improved machinery or improved business methods in this industry, a great saving in production, the public have a right to a portion of that saving, and if they do not get it the public are injured to that extent, and this Bill; in theory, should break up the combine.

Senator Millen - Then there would* be no saving.

Senator PEARCE - I was just going to point that out. The success of the Bill in breaking up the combine would involve the elimination of the saving accomplished by co-operation.

Senator Millen - Which the consumer should get, but will not get, if the Bill is effective.

Senator PEARCE - If this Bill is effective, the consumer cannot get it. The saving has been gained by eliminating the element of wasteful competition, which the effective operation of the Bill would reintroduce. Honorable senators will not in these times find the enormous hoardings at various railway stations covered with beautiful advertisements recommending the use of certain tobaccoes, cigars, and cigarettes. At one time one could scarcely look out of the window of a railway carriage without seeing such advertisements.

Senator Drake - That is injurious to the bill-posting industry.

Senator Keating - And to designers, printers, and paper manufacturers.

Senator PEARCE - It certainly is. I ask honorable senators to note the judicious way in which the trust advertises to-day. We do not find large advertisements from the trust in every newspaper. It is only in certain influential newspapers, and especially those which used to attack the tobacco combine and write of the operations of the " tobacco octopus," that we now fin'd full-page advertisements of the products of the trust. The little uninfluential newspapers that used to get an occasional advertisement from the manufacturers of tobacco get none to-day. I say that, if this Bill is effective in dealing with this trust, it will confer no benefit upon the public, . who will have to pay the same price, and perhaps a higher price, for tobacco, cigars, and cigarettes.

Senator Best - If the trust is in the position referred to, of having an absolute monopoly of trade, they can, if they choose, raise prices.

Senator PEARCE - They can do so.

Senator Best - If they were broken up under the operation of the Bill they could not do so.

Senator PEARCE - We had one witness before the Tobacco Commission who, when he was asked why the trust did not raise prices, very naively said, " You do not suppose that we are going to raise prices while the Labour Party are conducting this campaign for the nationalization of the industry? You surely do not think that we are going to give them an argument to use throughout the Commonwealth? We are not , so simple." For that reason, I think it islikely that for some time they will not use their power to raise prices. I say that if the Tobacco Trust is broken up by the operation of this Bill, no benefit will . be conferred on the consumers. It would1 not be in the interest of the consumer to break up the trust if we are to go back to the conditions prevailing when a number of small factories were producing inferior tobacco, and competing in a ruinous way with each other, which led to no adequate profits to the manufacturers or any benefit to the public. That is one reason why I do not desire that the Bill should be applied to that particular trust. Now I come to the Sugar Trust. So far as manufacture is concerned, the operations of the Sugar Trust are confined to Australia and Fiji. The Colonial Sugar' Refining Company is undoubtedly a commercial trust within the meaning of this Bill, but it is not a complete monopoly. I think there are two other little refining companies which do about5 per cent. of the trade. What would be the effect of this Bill on the Sugar Trust?

Senator Best - It need not be a complete monopoly to come under the operation of the Bill.

Senator PEARCE - The Colonial Sugar Refining Company have undoubtedly ad opted the rebate system in all its worst features. Grocers who take sugar from them are given a rebate under a written agreement that they will take the sugar of this company only. If they break that agreement they will lose their rebates. I am very doubtful whether this Bill could be used successfully to interfere with the Sugar Trust. Does this measure give us the power to fix a selling price ? We have a Tariff against sugar coming into the Commonwealth, and so long as it continues in force the Colonial Sugar Refining Company can fix the price of sugar in Australia, even without their present agreements with their customers. I fail to see how we would benefit the consumers by breaking up the Sugar . Trust. I believe that if we did so the position would be exactly what it is to-day ; the trust would continue to exist in spite of us, and to fix the price of sugar in Australia.

Senator Story - If we imposed a fine upon the company they could take it out of the consumers.

Senator PEARCE - That is so.

Senator Millen - When the honorable senator uses the term "trust," as applied to the Colonial Sugar Refining Company, does he mean to contend that the company is a trust within the definition of the Bill?

Senator PEARCE - Yes, I do.

Senator Millen - Under this Bill " trust" has a special meaning. I do not think the Colonial Sugar Refining Company comes within it, though I do not say that it would not come within the purview of the Bill.

Senator PEARCE - A " commercial trust," according to the Bill - includes a combination, whether wholly or partly within or beyond Australia, of separate and independent persons (corporate or unincorporate) whose voting power or determinations are controlled or controllable by -

(a)   the creation of a trust as understood in equity, or of a corporation, wherein the trustees or corporation hold the interests, shares, or stock of the constituent persons ; or

(b)   an agreement; or

(c)   the creation of a board of management or its equivalent ; or

(d)   some similar means ; and includes any division, part, constituent, person, or agent of a Commercial Trust.

Senator Millen - The Colonial Sugar Refining Company might constitute a monopoly, but I hardly think that it constitutes a trust.

Senator PEARCE - If it is not a trust within the meaning of this Bill it will not be affected by it.

Senator Millen - It might be a. corporation acting in restraint of trade.

Senator PEARCE - In any case I do not see how the Bill could deal with that particular industry. I should like to refer to the kerosene industry, which has. spread from America to Australia, and I hope the Bill may do something to regulate it. The Standard Oil Company to-day compels its customers to bind themselves to take no other oil. In Australia there is another oil company called the Borneo Company, and I have it on the best authority that it is being crushed out of existence by the Standard Oil Company. If a grocer purchases any oil from the Borneo Company the Standard Oil Company may refuse to supply him with any of their product.

Senator Findley - It would have to be proved that the consumer was being affected.

Senator PEARCE - It would have to be proved that the consumer was being injuriously affected. There is some hope, , 1 think, that the Bill may have the effect of bringing about fair conditions in the oil trade in Australia. Now I come to another industry, and. the most important of all, in my opinion, to which this Bill should apply, if to any. I allude to the Inter-State1 shipping industry, which today is undoubtedly carried on by a trust. I am confident that the industry is controlled by a board on which the various shipping companies in Australia, with the exception of one, are represented. Fares and freights are fixed, and a general agreement is entered into; but what I wish to point our is that the agreement is an open one, there being no attempt at concealment. What would be the effect of this Bill ? It would be to drive the combination .underground, and, instead of an open agreement, we should have a "gentlemen's agreement," like that of the Coal Trust. We should then be powerless to sheet home a conviction under this Bill. All that the shipping companies would have to do would be to make an agreement of honour in regard to fares and freights. Some sceptics may say that members of the trust would soOn, break away from such an agreement. But without a written agreement there would be the most powerful compelling force to obedience. Any company in Australia who tried to compete with the combine would have a very hot time. If any of the parties were to break away from the agreement, the other companies could run the recalcitrant one off the coast of Australia, and practically ruin him. Where is the inducement for a steam-ship company to break away from such an agreement? Under the terms of the arrangement the profits are greater than ever before, and interest on debentures and shares is assured. If a shipping company were to revert to the old system of competition, interest and dividends would become uncertain. All the tendency is to abide by the agreement, and endeavour to carry it out to the utmost of their power. This Bill does not hold out a scintilla of hope to the people of Australia, so far as the shipping combine is concerned.

Senator Fraser - It is only a union.

Senator PEARCE - Certainly, and I am not condemning it.

Senator Best - Is the combination to the detriment of the public?

Senator PEARCE - I am certain that it is detrimental to the public in its effects. The combine could be made of great service to the public, but, unlike the tobacco combine, it has undoubtedly used its powers. The people of Western Australia are absolutely dependent on sea carriage for their goods from the eastern States, and they consume in that State more foodstuffs than they produce. What happens is that the shipping companies, by reason of their combine, are able to take tribute from the grower of the foodstuffs and also from the consumer in Western Australia; and the freights charged are altogether out of proportion to the services performed. Such a system is unjust, not only to the consumers in the West, but also to the producers in the East.

Senator Mulcahy - Are the dividends of the shipping companies very large?

Senator PEARCE - During the last few years these shipping companies have been able to build some of the largest steamers on the coast out of the profits. * Senator Mulcahy. - Tax the companies on their profits.

Senator PEARCE - If Senator Mulcahy considers the dividends paid by those companies he will see that the combine is a most profitable investment. This is a sample of local trusts which, it seems to me, the Bill will be powerless to effectively deal with. There is another phase of the Bill to which I desire to call attention, and which came under my notice as a member of the Royal Commission on the Tobacco Monopoly. There is an agreement in the tobacco trade very similar to that referred to by Senator McGregor as existing in the bootmaking trade. The States Tobacco Company, which is the cigar branch of the Tobacco Trust, have in their possession a number of cigar-making machines, by arrangement with the American trust? To show honorable senators the value of these machines, I shall read some evidence given before the Royal Commission to which I have referred. Mr. Arthur Hirschman, a cigar manufacturer in Sydney> gave the following evidence: - 7091. Where are those machines used? - In Melbourne, in the States Tobacco Company. I produce, for the information of the Commission, what is styled the bunch before becoming a cigar. It is made by hand, or by block. The ten machines would turn out 30,000 bunches a day, which would be at the rate of 150,000 per week. A boy or girl is employed on each machine, and is paid, at most, 15s. per week to work it. That shows the cost of making the quantity I have named in a week would be £7 10s. The cigarmakers of this city have lately had a case before the Arbitration Court, and from the particulars given there, it is seen that the very lowest at which I could make the cheapest cigar would be 2s. 6d. per 100 ; that is, to finish it right out. The rolling means putting on the covers after the bunches are made, and whether they be Sumatra, Havanna, or Mexican, the cost is is. -8d., or two-thirds for rolling, and iod., or one-third, for making the bunches. So that to manufacture 150,000 by hand at iod. per 100 would mean £62 10s., as against the cost by machinery of £7 10s. The rate I have mentioned is as fixed by the Arbitration Court, and is the same as in Victoria for block-work cigars. If taken on the basis of 50 working weeks in a year, it would mean a total wage of ^3,125, as against machinery wage of ^375, giving the trust an advantage of ^2,750 per annum.

Senator Millen - That is an advantage which comes from the possession of the machines, and not from any combination amongst the manufacturers.

Senator PEARCE - There is a combination. The difference between the case quoted by Senator McGregor and the case I am now citing is that, while any manufacturer in the boot trade may, on' terms, obtain a complete instalment of plant on application to the boot company, the cigar-making machines cannot be obtained on any terms or conditions, We had evidence from witnesses who had offered to take the machines on any conditions, but were refused.

Senator Playford - That is due to a patents monopoly.

Senator PEARCE - A witness named Solomon J. de Beer, who was examined in Melbourne, gave evidence as follows : - 6447. Have you made any inquiry as to the possibility of getting those machines? - Yes, and I find there is no chance whatever of getting them. The States Tobacco Company has a monopoly of the only good cigar-making machine in creation. There are other machines to be had which will work what we call " scraps," but those are, in addition, " bunch " machines. The machines used by the States Tobacco Company are the only ones that actually do the work. 6448. How did they get a monopoly? - I think they pay a royalty rate. 6449. How did you find out you could not get the machines? - I had information from Home that we could not get the machines. My brother inquired into the matter there. 6450. Did he tell you you would have to get them from the States Tobacco Company ? - The reply I got was - " They are not to be had." 6451. The States Tobacco Company have got them ? - That he did not say. Since the States Tobacco Company have the machines working, 1 have come to the conclusion that they hold the right to the use of those machines.

Other witnesses told us that the States Tobacco Company have the sole right to the machines, and that when the inventors in America were written to, they referred applicants to the company.

Senator Playford - That is a patent right conferred by the Government on the inventor of the machine.

Senator PEARCE - It is a monopoly obtained by the misuse of powers under the Patents Act. I do not think it was ever contemplated that any one, not even the original patentee, should have the right to monopolize a machine.

Senator Playford - The right is obtained by purchase from the original patentee.

Senator PEARCE - It seems to me that this is a monopoly which the Bill might very well be used to rectify, by compelling the owners to allow the use of the machines on conditions. If the case of the boot manufacturers is a hard one, how much harder is that of the cigar manufacturers, who are subject to an enormous handicap by reason of having to use hand labour. This is the kind of monopoly at which the Bill should aim.

Senator Col Neild - The honorable senator might as well make a charge of monopoly in regard to the carriage of letters* and the conveyance of telegrams.

Senator PEARCE - The honorable senator may not know it, but monopolies of the kind he mentions have been broken down bv law. I intend to support the second reading of the Bill, notwithstanding my criticism, because I recognise that these trusts must be dealt with. There is in existence in Australia a party known as the Liberal Party, who say that we can control and regulate trusts. We Socialists "say that such trusts are beyond our control and regulation. The Government, who represent the Liberal Party in Australia, submit this Bill as a proposal to regulate industries, and I am prepared to allow them to try their regulating measure. I believe the Bill will fail. I have no faith in the first part of the Bill, because I feel sure it will not have the effect anticipated, but I am prepared to allow the Government to try to regulate trusts. As I said before, I support the dumping provisions, because if there be dumping those provisions will be useful. Although there may be some danger in the measure, still I feel justified in voting for the second reading, in the hope that in Committee the particular provisions to which I refer may be safeguarded in such a way that they will not be used to the detriment of Australian industries.

Senator MACFARLANE(Tasmania) f8.29l. - J was much pleased to listen to the honorable senator who has just sat down, but I am surprised that, after showing the defects of the Bill so clearly, he should lamely end by saying that he is going to support it.

Senator Col Neild - The honorable senator has to.

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